May 03, 2019

Stephen Moore

Stephen Moore joins to discuss the Federal Reserve.

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He loves to lavish praise on the president, and then he was tapped for the Fed.
But not everyone bought it.
This week on ‘Firing Line.’

Why are they so afraid that someone with my views will get on the Fed?

A champion of supply-side economics and Conservative commentator, Stephen Moore advised Donald Trump on the campaign trail and in The White House.

The economy is just booming.
It’s Donald’s Dow, isn’t it?

He became one of the most controversial candidates for the Federal Reserve Board in history.
His views on the the Fed and his past statements on women and minorities started to catch up with him.

‘The first thing Donald Trump does as president is kick a black family out of public housing’? And it has Obama leaving The White House?
I mean, I just love that one.
[ Laughter ]
When ‘Firing Line’ spoke to Stephen Moore on Tuesday, he tried to explain…
That is a joke I always made about — But I didn’t mean it like a black person did.

…or adding fuel to the fire?

‘Honey, did you see my interview on TV this morning?

With Republican opposition mounting…
I would vote no against him, should he come up for a vote.

…President Trump announced Moore decided to withdraw.
Our extended interview with Stephen Moore on ‘Firing Line.’

‘Firing Line with Margaret Hoover’ is made possible by… Corporate funding is provided by… and by…
Stephen Moore, welcome to ‘Firing Line.’

Wow. It’s such a privilege to be on the show.
You know, I knew Bill Buckley, and you have done such a fantastic job carrying on his legacy on this show.

Well, I appreciate that.
You have been one of the largest and most prominent exponents of Conservative supply-side economics.

For sure.

And really for the last 20 years, both on the political side and on the policy side.
And now you are an outside adviser of The White House for Donald Trump.
You were also an inside adviser of his political campaign, his presidential effort.

Right.

And the president has asked you to serve on the Federal Reserve Boards of Governors.

Yep.

Tell me when you first met President Trump.

It was almost exactly four years ago, and his campaign was just getting going.
I walked into that room to see him at Trump Tower on Fifth Avenue having a negative impression of Donald Trump.
I didn’t like his persona.
And we spent about an hour, and I walked out of that room with stars in my eyes.
Then the other thing that happened to me, Margaret, that really influenced my working with Donald Trump was going to some of his rallies and just meeting the people.
And these were not Republicans, Democrats.
They were working-class people.
They were bus drivers and schoolteachers, a lot of Hispanics and a lot of blacks and people who just felt like both parties —
Wait. Those rallies were not full of Hispanics and African-Americans.
No, no. Hold on.
Those rallies were not full of African-Americans and Hispanics.

There were a lot.
You would be surprised, actually.
It surprised me about them, how many people — minorities were at those things.
But it was working-class people who just felt that they were — that neither party was listening to them.

So, this is what’s very interesting to me, because as a guy who is a proponent, a supporter of Reagan economics, is it that political savvy Steve Moore noticed and recognized that Reagan Democrats were showing up at these rallies?

Exactly.
You put it perfectly.
That’s exactly right.

You wrote a book called ‘Trumponomics.’

Mm-hmm.

And ‘Trumponomics,’ to me, reads largely like an annal to supply-side economics along the lines of the traditional Republican/Conservative economic orthodoxy with a few differences.

Well, but those differences are important, though.
You know, Trump — the first thing he said to us is, ‘I want a bigger tax cut than Reagan had,’ you know?
And then he said, ‘You know, I want to de-regulate the economy.’

And those are traditional economic Conservative policies, but the things that are different —
But in trade, that was the one, I think, Larry Kudlow and I were a little uneasy about, to say the least, ’cause he was basically saying, ‘We’re gonna have steel tariffs.
We’re gonna have all these –‘ You know, he called himself Tariff Man at one point.
And that made us uneasy, but then Trump said, ‘I believe in free trade, but these other countries aren’t playing by the rules.
It’s not a level playing field.’
And, frankly, I did start looking at the evidence, and Trump had a point.

In the book ‘Trumponomics,’ you touted the president’s economic agenda.

Yeah.

You’ve called him bigger than life, the Mick Jagger of politics.

[ Laughs ]
How do you rank him as a president so far?

In some ways, Donald Trump has governed even more conservatively than Ronald Reagan did.
So far, you’ve got to give him very high marks on the economy.
I wish, stylistically, he would be more presidential, in terms of — Sometimes, the tweets just drive me crazy.

Mm-hmm.

I mean, I do think he needs to be more — He’s the president of everyone, and he needs to do that.

You were a key adviser on the Tax Cuts and Jobs Act.
You believe it’s been his political success.

I think policy and political.
I mean, you know, the economy is doing better than it’s done in 20 years.
We’ve got a better labor market than any time — If you’re a worker looking at a job, this is the best labor market in 50 years.
And if you look just, you know, at what has actually happened in consequence to that tax cut — And not just the tax cut.
It’s the whole agenda.
It’s been very positive.

You know, one of the Conservative orthodoxies that I miss is the adherence and the concern about debt and deficits.

Yes.

And that has been one piece of the budget and this part of the presidency so far, in terms of economic policy and fiscal policy, that hasn’t tracked.

Well, one of the first things that we said to Donald Trump, when Larry Kudlow and I sat down with him is, ‘The first thing you’ve got to do, if you want to bring the debt and deficit down is, you’ve got to get the economy growing faster.’
So, the first preoccupation was getting the growth rate up, which we’ve done.
We’re now at 3% growth, and that’s — You know, every percentage-point increase in growth over 10 years reduces that debt by $3 trillion.
But what we’ve learned is — it’s necessary, but it’s not sufficient, right?
Because you’re right.

If we keep spending, we’re not going to close the debt.

It’s pretty easy, right?
And I think there is an area where I’ve been a little bit disappointed with Donald Trump.

Here’s my question.
In the tax bill, corporate tax revenue came down, and Conservatives always say, ‘You cut the corporate taxes, you’re gonna have increased revenues, and that will help close the budget.’
But we haven’t seen that yet.

So, that’s true.
And, by the way, I’m not one who believed that the tax cut was going to pay for itself.
I just basically felt it would get people working again.
It would get the economy moving faster.
And that ultimately — Look, the question would be, ‘Would you be willing to do a tax cut if it increased the deficit, but it created more jobs and more prosperity for people?’
I’d be willing to have the deficit a little higher to get America working and get people back in jobs.
And so I’m not —
Even if we’re at $22 trillion.

Well, we inherited $21 trillion.

Sure, sure, sure.
But then, again, at what point does each administration sort of take on a responsibility to whittle away at that?
So, your comfort level was sufficient —
My top priority — And I can’t speak for Donald Trump, but I think it probably was his — is, ‘Let’s get these people back on the job.
Let’s get them working.’

Conservatives only seem to care about debt and deficits when Democrats are in power, right?

That is a fair point.

And you did write that, you know, with 3% growth, we would whittle away at the deficit, but we haven’t.

The first important thing is make sure the economy is growing faster than the debt.
In other words, you know, ’cause as with the household, what matters is not just your debt, but what’s your income?
And so, from that standpoint, we’ve kind of stabilized the debt.

I wonder if it doesn’t just whittle away at the credibility of the supply-side economics and not just supply-side economics, of Conservative fiscal credibility to say, ‘The tax cuts are gonna pay for themselves.’
And here we are, and there’s growth, unheard of growth in the last 10 years, and we’re not doing it.

So, but I just want to be clear on one thing.

And so do we bolster the arguments of the other side by not delivering on our promises?

I never said that the tax cuts would pay for themselves.
What I did say is, we’re gonna get more growth and that, over time, that growth will, you know, help pay for the tax cuts.
The philosophy are simple.
The best way to bring down the deficit is get people off of welfare and into jobs where they’re paying taxes.

Over the last few years, you’ve been very critical of the Federal Reserve, including Federal Reserve Chairman Jerome Powell.
Let’s listen.

There’s a view on Wall Street that, somehow, these people in Washington at the Fed are some oracles from God, and they’ve screwed up so many times.
I mean, what kind of idiot — I have to say, this was one of the most idiotic rate hikes ever.
I do think, you know, Jerome Powell should really think about whether he’s up to this job.
I mean, we’re talking about trillions of dollars of losses because of a boneheaded play by the Fed.
Look, I think Powell has been incompetent so far.
If the Fed raises interest rates tomorrow, they should all be fired for economic malpractice.

Ooh!

Why have you been so critical of Chairman Powell.

So, by the way, did you — It’s so interesting to look at those clips, because did you notice what the Dow Jones was at after they, you know, raised those interest rates?
21,800.
Now it’s at, you know, 26,000.
And I’ve been vindicated by this.
Margaret, it’s an important point.
This was a big boneheaded play.
And the reason I’ve been vindicated is — three weeks later, as you know, the Fed had to admit that it had made a mistake, and it doesn’t do that very often.
And it began reversing course, and ever since then, you know, we’ve had a boom in the economy.
Look, I do think my rhetoric was overcharged, but I think, in terms of what I was saying, I think most people would agree I was right.

Well, and then you wrote an editorial for in March, saying that the Fed is a threat to growth, basically essentially making the case that you just made, that those interest-rate hikes had a negative effect on the economy.
There’s a story, it’s been reported, that Larry Kudlow took that op-ed right into the president’s desk, and it inspired him to give you the call to ask you to be one of the Federal Reserve governors.
Is that what happened?

I wasn’t there in the room, so I can neither confirm nor deny that.

That’s what you’ve been told?

You know, I do know Donald Trump liked that piece and he liked my point, which is — this is the core of supply-side economics, so I’m so glad you’re asking me about this.
What we believe as supply-siders, if you cut taxes, if you reduce regulation, if you make American companies great again, they will produce more.
And if you produce more, you shift, outward, the supply of goods and services.
And a lot of Liberals believe, when you have that kind of increase in growth, that that causes inflation.
And we’ve always believed that’s completely backwards.
And so we’ve completely rejected this idea that, somehow, every time we get wage growth or every time we get more growth in the economy, ‘Oh, my gosh.
The Fed has to pull it back.’
Why? We want workers to be better off.
I mean, think about this.
If every time the wages start to rise, the Fed pulls it back, how are we gonna get workers to be better off?

The question is — when are the reasonable times for the Feds to step in to limit the oversupply and —
So, people have been saying that I’m some kind of dove, that I just want low interest rates.
That’s not true.
I mean, I’m actually an inflation hawk.
I lived through the 1970s, you know, when we had 15% inflation.
That destroyed our economy.
I don’t want inflation, Margaret.
I want stable prices.
And my problem with the Fed back and what they did last year was — we had 4% growth with no inflation, and they started raising interest rates, and I was like, ‘Why?
What’s wrong with this picture?’
You know, if you’ve got a game plan that’s working, you stick with it.
You don’t reverse course.

So, the president clearly liked the opinion editorial you wrote for
Right.

But he also likes other things you say.
Let’s watch.

Whatever Trump is doing on the economy, it sure is working.
You look at what’s happened in the last 10 months, it’s an amazing story of revival.
You’ve seen record business confidence, consumer confidence.
It’s Donald’s Dow, isn’t it?

You know, I think there’s a question about whether you’re too partisan to be on the Fed and how important the independence of the Fed is from the political process.

It’s a great question, because I’ve been thinking, actually, a lot about this.
I don’t think politics should —
But why?
Can you explain why they shouldn’t be partisan?

Because we don’t want, you know, the Fed to be juicing the economy with all this, you know, money supply before the election.
And that causes a herky-jerky economy.
It’s bad for the economy.

Because the point of the Fed is to keep long-term stability for the financial system.

And you don’t want politicians telling what the Fed to do.
Now, that being said, I do think there should be accountability of the Fed.
When the Fed makes mistakes, like it did in December, it’s not inconsequential.
You know, why is everyone so nervous about my economic — I’m only gonna be one of 12 voters on the Federal Reserve Board.

I think they’re less worried about your dissenting views than they are about the partisanship.

Okay, first of all, I think exhibit ‘A’ would be my book, ‘Trumponomics,’ which you’ve read.

Exhibit ‘A’ is a partisan document.

Well, but no.
If you read that book, you’ll see that there are a lot of areas where I’m critical of Donald Trump.
You know, I’m critical of the fact that he’s allowed the spending to go forth.

‘The Mick Jagger of politics’?
Well, yeah.
Look, I mean, the guy is doing a great job on the economy, but I disagree with him on steel tariffs.
He knows that.
I mean, he calls me every once in a while.
He yells at me for not, you know, getting behind him on some of these things.

Like what?

Like on trade.
But, no, look, I’m gonna try to do for the country and our economy what I think is best, regardless of what Donald Trump is saying in The White House.

Because, also, I mean, exhibit ‘A,’ ‘Trumponomics,’ is really largely a book about fiscal policy, not monetary policy.

That’s true.

And, you know, one of the critiques, too, is — your experience of monetary policy is less.

That’s true.

I mean, when you have an economic collapse or an economic challenge, like we had in 2008, it’s people who have studied monetary policy who end up informing —
See, this is where — I disagree with your point here.

Let’s let Milton Friedman weigh in, and then let’s talk about it.
In this program, in 1968, Milton Friedman was on, and he had something to say about fiscal and monetary policy.
Let’s take a look.

…the government itself has been the main, major source of instability.

So, I completely agree.
You know, I knew Milton Friedman.
You know, I adored the guy.
What he said is exactly right, and I was just about to say that, that you mentioned the financial panic that happened in 2008 and ’09.
The Fed helped create that.
I was at board, at the time.
Month after month, we warned that —
It was fiscal policies also, though, right?

Yeah, but it was the monetary — On the monetary side, they built up a bubble.
Now, I’m not saying the Fed was the only thing that created the bubble.

The GSEs helped create the bubble.

Well, of course.
There were a lot of contributing factors, but the Fed kept — Where did all that excess money go that the Fed was putting in the economy?
It went into housing.
And then we had the bubble burst, and then the Feds — You know, I’m not so sure the Fed — Everybody says they saved the economy.
They didn’t save the economy.
They contributed to the — Exactly the point that Milton Friedman was making in that interview.

Well, you clearly disagree with the idea that the Fed saved the economy, in terms of 2008 and 2009.

You know, that was a period of panic.
I remember it — You know, it was a surreal experience with banks failing.
You know, I don’t know what I would have done if I had been on the Fed at that time.

At the time, you argued we should have just let Lehman go.
Do you agree with that now?

I don’t like bailouts.
I don’t like the idea of the government bailing out companies —
You cheered Lehman’s failure, though.
Do you think that that was a mistake, in hindsight?

You know, I’d have to — I’m not so sure.
I’d have to look back at it, and I don’t know all of the, you know, details of this, but I don’t like bailouts.
And I thought, you know, it’s one thing to, like, bail out the people who held the deposits in these banks, but to bail out the people who actually were the investors in these?
No, I don’t think that was a good idea.

On the monetary side, in terms of how the Fed navigated that period of decline…
I’d give them a B-minus.

…the quantitative easing, the printing of money, and the lowering of interest rates — was that the right call?

On balance, it probably stopped the crash that was happening.
See, in that period, 2009, ’10, ’11, the problem wasn’t monetary policy.
I mean, the problem was — we had massive increases in government spending.
We had Obamacare.
We had tax increases.
We had massive regulation.
And my point, Margaret, is — you can’t make up for bad tax and regulatory and fiscal policy by printing money, and there’s a lot of people who believe that.

During the financial crisis, you were concerned that there would be hyperinflation.

Yeah.

You warned that the printing of money would create hyperinflation.
It didn’t happen.

Yeah.

And then you said that money was too loose then.

Right.

Do you agree with that now?

I thought, with all of this money that was being injected into the economy by the Fed, we would see inflation, but — And I’ve admitted I was wrong.
Most economists did think that was gonna happen.
So, yeah, I was wrong about that.
It’s because the economy — It was like the Fed was dumping —
Was it because of how the Fed navigated interest rates in the context of their easing?

Yeah, but don’t forget we had the worst recovery from a recession since the Great Depression in that period.
So, you know, I think, absent a lot of the policy mistakes that were made in that period, we could have had a much healthier economy and a bigger spring-back —
I mean, the inverse — Of course, you can’t prove it, right?/ But the inverse of this is — absent some of those kind of policies, we might have had a worse —
No, you’re exactly right.
The counterfactuals are hard to prove.
I will say this, though, that when Obama came into office, every single year, Margaret — you can look at the statistics — every year, they predicted we were gonna get 4% growth, with the fiscal-stimulus plan, and we didn’t get anywhere near 4% growth.
We didn’t even get 3.
So I think they have a lot of explaining to do themselves.
A lot of people got that whole period wrong.

It’s been a month since Donald Trump called and asked you to serve as a Fed governor.
When do you expect to be sent up to the Senate?

Well, so, my problem right now is — I have to get massive amount of paperwork done.
We’ve got to do the financial disclosure.
We’ve got to do the FBI investigation.
That will — It would probably be, I’d say, a month.

Have you talked to the president?

Not since, you know, he called me and asked me to do this, which was one of the great honors of my life.
I mean, he’s totally supportive of me.
You know, and I have to say, a lot of arrows have been flying at me for things I’ve said 20 years ago, and Trump — If anyone gets this, it’s Donald Trump, because, you know, he went through this a thousandfold during the campaign.
As long as it’s on the economy, I think, you know, I’ll be fine.
If it gets back to, ‘You know, you said something about these women 20 years ago’ or ‘You did this or that,’ you know, then people are gonna say, ‘Well, he shouldn’t be on the board.’

Well, you’ve said — I mean, you’ve even used the words you were being ‘Kavanaugh’ed.’

Uh-huh.
Actually, I wasn’t the one who said that.
Others have been saying it.
But anyone who looks at the evidence, they would see — You know, I talked to a reporter the other day who’s covered the Fed for 30 years.
He said he’s never seen anything like this before.

You did say that, ‘They’re pulling a Kavanaugh on me.’

I’m just saying I wasn’t the first person who said that.

Because these have come up, and they are gonna come up —
By the way, do you not think I’m not being Kavanaugh’ed?
You’ve been watching what’s happening.

Here’s what I think is happening.
What I think is happening is — people are concerned that you’re an ideologue, and they don’t want ideologues in the Fed.

You know, people can cherry-pick and say, ‘Oh, you said this 15 years ago.’
And if you kind of nitpick and you’re gonna look for those kinds of things, you’re gonna find stuff.
I’m not an altar boy.
You know, I think there should be a statute of limitations on saying stupid things, and I’ve said some pretty stupid things in my life.

But, okay, so, let’s go to one of them.

It’s not a good thing that black women are making more than black men today.
In fact, you know, the male needs to be the breadwinner of the family, and one of the reasons I think you’ve seen the decline of the family not just in the black community, but, also, it’s happening now in the white community, is because women are more economically self-sufficient.

This is from 2000, and the argument is — the male needs to be the breadwinner.
I mean, there are — Here’s the reason all of these comments are relevant and germane.
You’re going up to the Hill and you’re having to talk to women senators and senators who you don’t have particularly great relationships with, whose votes you need in order to get on.

So, let me kind of explain what I was saying there, and it wasn’t said very — And, by the way, it was 20 years — Times have changed a lot.

Yeah, except for you said it again in 2014.

But I will say this.
I do believe one of the biggest problems with the American economy today is what has happened with male wages over the last 25 to 30 years.
Women’s wages have gone up, which is great.
I’m for higher wages for everybody.
The problem is — black-male and white-male wages have been falling, and I do think that’s a problem for our society.

I think most people would agree that’s a problem.
The problem is that you said that the male needs to be the breadwinner.

No, and I shouldn’t have said that.
But what I am saying is that, you know, when you have male wages declining like that, they become less important in terms of the breadwinner in the family, and that can lead to family instability.

We can’t have societal stability if women are making more than men in the family?

No, no, no, no, no.
I like the direction women’s wages have been going.
I mean, women have made great strides —
Do you still believe that men need to make more than women?

Women’s wages have gone like that, and male’s wages have gone like that, and, yeah, I think that’s a problem.
I’m not saying I want women’s wages to be lower.
I want to see men’s wages rise.

Another statement that keeps coming to light is a joke you made about the Obamas just after the elections.
Here, I’ll play it.

By the way, did you see that there’s that great cartoon going along that headline, ‘First thing Donald Trump does as president is kick a black family out of public housing’? And it has Obama leaving The White House?
I mean, I just love that one.
[ Laughter ] But… It’s just a great one.
So, you know, that is a joke I always made about, you know, Obama lives in — You know, the president lives in public housing, but I didn’t mean it like a black person did.
I just meant that, you know, being in The White House — You know, for example, when I was working with a lot of women and families who were involved in the education-voucher program, you know, here in D.C., and people would say, ‘Well, you know –‘ And these were blacks who would say, ‘You know, why does Barack Obama get to send his kids to any school that he wants to, and we can’t?’
And they’d say, ‘He lives in public housing.’
And it was just kind of a joke that I was refer–
The optics, though, of the Conservative white man talking about kicking a black man out of public housing —
Yeah. So I shouldn’t have said it.
Again, you go back 30 years, you’re gonna be able to find clips over and over and over again about me.
I have a long paper trail.
I mean, there’s no question about it.
And I say things that are kind of jokes that if people want to pick them apart, then I probably won’t, you know, get on the Federal Reserve Board.
That’s why I keep circling this back to, ‘Do you like my economic ideas?’
I want blacks to make more money.
I want women to make more money.
I’ve said, you know, prosperity is a women’s issue, it’s a race issue, and it makes everyone — A rising tide really does lift all boats.
I mean, why are people so afraid of having me on the Fed?
And I think mainly ’cause a lot of my intellectual adversaries are afraid that if I go over there, that I will prevail on a lot of my ideas.

But, I mean, do you think that’s possible, though?
Do you think you have the ability to persuade —
There’s a lot of people on that board.
You know, I’ll be 1 of 12 votes, so — But —
So which is it?
Will you be able to persuade them or will you not be able to persuade them ’cause you’re only 1 of 12?

Well, one of the reasons I want to go over there is to persuade them.
Look, I’ve said this about Chairman Powell, who I’ve said, you know, some negative things about — I want to make Chairman Powell the most successful Fed chairman ever.
And how does he become the most successful?
By growing the economy at 4% with no inflation, high wages, you know, a lot of jobs for people.
I’m a prosperity guy.
I’m a growth guy.
I want the economy to grow as fast as it can.
I want people — women, blacks, you know, every group — to have a better, you know, living standard.

Yeah, do you think that the people at the Fed don’t want that?

I think they have a misguided model in their head.
I think they believe that growth causes inflation.
There’s no limits to our growth in this country.
We can grow faster, and I really believe — And the guy who really believes that is Donald J. Trump.

Which is exactly why, actually, it’s probably not a partisan play against you as much as a concern that you’re partisan.

Yeah. Just because I support good policy in The White House doesn’t —
You call good policy Republican policy.
I mean, you weren’t for raising interest rates when Obama — I mean, your view about interest rates has changed depending on who the president is.

And, you know, what happened is — in the last five years, I’ve really tried to become — ‘Cause you’re right.
I’ve been a fiscal-policy guy my whole — The last five years, I’ve really focused on what the Fed is doing and I’ve really come to the conclusion, do no harm.
You know, if the economy’s doing well, you know, keep policy where it is and get out of the way.

If you had to make a prediction today about whether you make it through the nomination process —
I think I’ve got a really good shot at it.
I think, you know, again, if this is about my economic ideas and my economic qualifications, I think I’ll win 60 to 65 votes.
If it’s about these clips of, you know, insulting things that I said 20 years ago, that I am sorry for — and times have changed — then I think I’ll probably be in some trouble.
But, you know, I think I’ve talked to a lot of the Republican senators.
They know me.
I’ve been in this town a long time.
And I think, ultimately, they will say, you know, ‘This is a good person.
This is a person who has the economy right.’
And I think I will be a member of the Federal Reserve Board this time next year.

Steve Moore, thank you for coming to ‘Firing Line.’

Thank you.
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